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Holiday pay ruling could hamper investment in hospitality sector

Published:  05 November, 2014

The ruling that overtime should be included in holiday pay could hamper investment and lead to job cuts in the hospitality sector, the Association of Licensed Multiple Retailers has warned.

Employers were concerned that claims would be able to be backdated as far as 1998, but the ruling said claims relating to holidays where there is a gap of more than three months would be inadmissible. In effect this would limit claims to the preceding year.

ALMR chief executive Kate Nicholls said: "The licensed hospitality sector is a first class employer, providing opportunities for both temporary and permanent work. Steps such as this, which penalise employers after the fact, are unhelpful, particularly when businesses will have complied with rules and acted in good faith.

"Businesses in the licensed hospitality sector already invest considerable amounts of time and money in their staff. The ALMR's Benchmarking survey shows payroll costs at an average of 24.2% of turnover, a sizeable increase from 17% in 1999.

"Additional costs and retrospective claims have the potential to derail investment in staff and hamstring business investment in other areas."

John Allan, national chairman of the Federation of Small Businesses, said: "Today's ruling leaves many questions unanswered. It has the potential to be very damaging to small businesses, presenting a real risk of small firms being forced to close down if faced by retrospective claims.

The ruling could be referred to the Court of Appeal which means a final decision could be several years away.

Although it's difficult to get a handle on how or how many businesses would be affected by any change, the FSB estimates that a third of small businesses pay staff for overtime, and government figures suggest that about a sixth of 30 million workers do paid overtime, meaning about 5 million people could be affected.